Question

What makes emerging markets attractive for international business? Discuss emerging markets as target markets, as platforms for manufacturing, and as sourcing destinations.

Answer 1

Emerging markets are attractive to internationalizing firms as target markets, manufacturing bases, and sourcing destinations. (Cavusgil, Knight, &Riesenberger, 2012, p. 262).

1. Target markets:
   1. Emerging markets have become important target markets for a wide variety of products and services. (Cavusgil, Knight, &Riesenberger, 2012, p. 263).
   2. The middle class is growing in emerging markets indicating an increase in demand for variety of consumer products including electronics and automobiles. (Cavusgil, Knight, &Riesenberger, 2012, p. 263).
   3. Emerging markets are outstanding targets for manufactured products and technology. (Cavusgil, Knight, &Riesenberger, 2012, p. 263).
   4. Businesses are important targets for machinery and equipment sales in emerging markets. For example, India is a huge market for textile machinery and China for agricultural equipment. (Cavusgil, Knight, &Riesenberger, 2012, p. 263).
   5. Governments and state enterprises in emerging markets are major targets for sales of infrastructure related products and services. (Cavusgil, Knight, &Riesenberger, 2012, p. 263).
2. Manufacturing bases:
   1. Emerging markets are home to low-wage, high-quality labor for manufacturing and assembly operations. (Cavusgil, Knight, &Riesenberger, 2012, p. 263).
   2. Some emerging markets have large reserves of raw materials and natural resources. (Cavusgil, Knight, &Riesenberger, 2012, p. 263).
   3. Emerging markets are important production platforms for manufacturing cars and consumer electronics. (Cavusgil, Knight, &Riesenberger, 2012, p. 263).
3. Sourcing Destinations:
   1. Companies have sought ways of transferring or delegating non-core tasks or operations from in-house groups to specialized contractors, which is known as outsourcing. (Cavusgil, Knight, &Riesenberger, 2012, p. 264).
   2. Outsourcing allows foreign firms become more efficient, concentrate on their core competencies and obtain competitive advantages. (Cavusgil, Knight, &Riesenberger, 2012, p. 264).
   3. Global sourcing or offshoring relies on foreign suppliers or production bases. (Cavusgil, Knight, &Riesenberger, 2012, p. 264).
   4. Emerging markets have served as excellent platforms for sourcing. (Cavusgil, Knight, &Riesenberger, 2012, p. 264).